Renouncing US citizenship, and the three tests that decide what it costs

Three tests, and the third one has nothing to do with money

Renouncing does not by itself trigger an exit tax. It triggers it for a covered expatriate, and there are three ways to become one. Meeting any single test is enough.

The income test asks whether your average annual net income tax for the 5 years ending before expatriation is more than $211,000 for 2026. Note what it measures: the TAX, not the income. Somebody earning far more than that while paying foreign tax credited against a small United States liability can be nowhere near it.

The net worth test asks whether your net worth is $2,000,000 or more on the date of expatriation. It is a gross measure of everything you own, worldwide, including a home and a pension.

The third test asks whether you can certify, on Form 8854, that you complied with all federal tax obligations for the 5 tax years preceding expatriation. Somebody with no assets and no liability becomes a covered expatriate by failing that certification, which is why it is the test that catches people who assumed they were too small to be caught by anything.

What the instructions say about the certification

"You fail to certify on Form 8854 that you have complied with all federal tax obligations for the 5 tax years preceding the date of your expatriation."

That is Instructions for Form 8854, Covered expatriate, third bullet, IRC 877A(g)(1)(A) and 877(a)(2)(C), from Instructions for Form 8854, Initial and Annual Expatriation Statement, read on 2026-09-06. The sentence above is archived with a hash of its text as it stood that day, so a change at source shows up here rather than being absorbed silently.

The two indexed figures, year by year

The income test and the exclusion both move annually, and both are set by the same revenue procedure that sets the foreign earned income exclusion. The store holds three years of each.

• The net worth column does not move because that test is not indexed. It was set in 2004 and has stayed at $2,000,000 through every year since, which means asset price growth alone has moved a great many people over it without their circumstances changing.
• The other two columns are indexed and the exclusion moved $44,000 across the three years shown.
• The tax year matters. A page quoting one figure for "the exit tax exclusion" is quoting a particular year and usually not saying which.

What the revenue procedure says about the exclusion

"Tax Responsibilities of Expatriation. For taxable years beginning in 2026, the amount that would be includible in the gross income of a covered expatriate by reason of § 877A(a)(1) is reduced (but not below zero) by $910,000 pursuant to § 877A(a)(3)."

That is Rev. Proc. 2025-32, implementing IRC 877A(a)(3), from Rev. Proc. 2025-32, annual inflation adjustments, read on 2026-09-06. The sentence above is archived with a hash of its text as it stood that day, so a change at source shows up here rather than being absorbed silently.

What the mark-to-market regime actually does

A covered expatriate is treated as having sold all their property at fair market value on the day before expatriation. The resulting net gain is reduced by $910,000 for 2026, and what remains is taxable.

Two things follow that people generally do not expect. Nothing is sold, so there is no cash from the deemed sale to pay the tax with. And the exclusion reduces the GAIN, not the tax and not the assets: it is subtracted before the rate is applied, so its value to you is the exclusion multiplied by your rate rather than the exclusion itself.

Certain deferred compensation, certain tax-deferred accounts and interests in non-grantor trusts are handled by separate regimes rather than by the deemed sale. This site holds no rule for those, so this page names their existence and states no figure for them.

Long-term residents are covered by the same rules

This is not only about citizenship. A long-term permanent resident who gives up their green card is subject to the same regime, and the definition of long-term is mechanical rather than intuitive: lawful permanent residence in at least eight of the last fifteen tax years ending with the year of expatriation.

Because the count is of tax years rather than of full years, a green card held for a little over six calendar years can touch eight tax years. Somebody who moved in December and left in January has two tax years from about a month of residence.

The consequence is that a person who never became American, never intended to stay, and was in the country for six or seven years can face the same three tests as a citizen renouncing after a lifetime.

Four positions, and which test decides them

• Modest income, modest assets, 5 years of returns filed. None of the three tests met, and no exit tax. The certification is what makes this outcome available.
• Modest income, modest assets, several years unfiled. Covered expatriate on the third test alone, regardless of how little is owed. This is the case the streamlined procedures exist to fix before expatriating rather than after.
• A house and a pension totalling $2,200,000. Covered expatriate on the net worth test, without any large income at any point, because that test is gross and unindexed.
• High foreign salary, high foreign tax, small United States liability after credits. Frequently below the $211,000 income test, because the test measures net income tax rather than income.

What this page will not tell you

Whether to expatriate is not a tax question and this page does not treat it as one. What it does is state the three tests and the two indexed figures with the documents that set them, so that the tax part of the decision can be checked rather than taken on trust.

The gift and bequest regime that applies afterwards to United States recipients of a covered expatriate's transfers, the deferral election for the mark-to-market tax, and the treatment of specific asset classes are all real and none of them is stated here as a figure, because the store holds no rule for them. Where a page states a number this one does not, that difference is worth investigating before it is worth trusting.

How to check a figure you found somewhere else

The reason this subject is unreliable online is not that writers are careless. It is that the figures change annually, they are published in documents nobody reads for pleasure, and a page that was right when it was written stays online long after it stops being right. A page with no date on the figure is not making a claim you can check.

Three questions settle almost every case. First, which tax year does this apply to, and is that the year the income was earned or the year the return is filed? Second, what document set it, and does the page name the section rather than the website? Third, when was it read, and does the page say?

Applied to the covered expatriate tests, those three questions are answerable from this page: every figure names its tax year, its source document and section, and the date it was read, and the sentence it came from is archived with a hash so a change at source shows up rather than being absorbed silently.

That standard is not a courtesy. A calculator or a guide that quietly serves last year's figure produces an answer no reader can distinguish from the right one, which is worse than an obvious error and far harder to notice.

Where this sits alongside the calculators

Reporting obligations and tax liability are different questions and they are answered by different parts of this site. This page is about the covered expatriate tests: a threshold or an amount set by a document, which either applies to you or does not.

The calculators answer the other question. They take a gross salary in one of the jurisdictions this site models and compute what is actually deducted from it, band by band, with each rate carrying the rule behind it. Every one of those jurisdictions has been checked against the average tax rates the OECD publishes for a single person at three different incomes, and any jurisdiction that missed by more than half a percentage point is not published at all.

Somebody working abroad usually needs both. The domestic calculation tells you what the country you live in takes. Pages like this one tell you what your home country still wants to know about. Neither substitutes for the other, and a page that blurs them is the reason so many people abroad discover a reporting obligation years late.

What this site does not do

It does not give advice, and it does not model your situation. Everything here assumes a single person on employment income with no dependants and no reliefs beyond those stated, because that is the only shape that can be computed identically across jurisdictions and compared honestly.

It does not model treaty relief, foreign tax credits, remittance rules, self-employment, or the interaction between two countries taxing the same income. Those are real and they change answers, and each of them requires facts about you that a page cannot know.

What it does do is state the underlying figures accurately, with their sources, and compute the domestic position in each jurisdiction it covers. That is the input every adviser asks for first, and it is the part most often wrong on the pages that rank above this one.